Business & farm

Yes. Since the IRS changed trade-in rules in 2018, I recommend marking the business vehicle sold - at the trade-in price.

• If you took actual expenses, the amount of depreciation each year would change. Add up all the depreciation taken through the business ownership time and subtract it from your original basis.
• If you took the standard deduction, the depreciation is built into the mileage amount allowed and calculated separately.  The annual depreciation amount per year included in the Standard Mileage  per IRS Publication 463 (Page 23) Car Expenses
• 2012 - $0.23
• 2013 - $0.23
• 2014 - $0.24
• 2015 - $0.22
• 2016 - $0.24
• 2017 - $0.25
• 2018 - $0.25
• 2019 - $0.26
• 2020 - $0.27
• 2021 - $0.26
• 2022 - $0.26

Gather the mileage you claimed each year and multiply it by the depreciation amount.

Example: Bought a used car for $10,000 in 2019. Drove 5,000 miles in 2019, 1,200 in 2020, 1,500 in 2021 and 4,000 for 2022.

Using the depreciation chart above, calculate the depreciation for each year.

2019 = 5000 x 0.26 = $1300

2020 =1200 x 0.27 = $324

2021 = 1500 x 0.26 = $390

2022 = 4000 x 0.26 = $1040.

Total depreciation taken = 1300+324+390+1040 = $3054.

Basis of car sold = original cost of $10,000 minus depreciation taken of $3,054 = $6,946.

The gain or loss will be the difference between the basis and the sales price.

• Sell the car for $7,000 and have a capital gain of $54.
• Sell the car for $6,000 and have a capital loss of $946.

See: What is a capital gain or loss?

The new vehicle now stands on its own since the trade in value is being taxed. This is why the IRS changed the rules to simplify the chain with vehicles. If the new vehicle cost $25,000 minus trade in, the basis is $25,000. The trade in value is the sale price of the old car. You could have instead sold your car to a person, then used that same cash to buy the new vehicle. It no longer matters who you sold the car, person or dealership.

@mojo1880